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The EU-Korea Free Trade Agreement: Making of a "Deep" Free Trade Agreement

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  • Das Dilip K.

    (SolBridge International School of Business)

Abstract

Korea a dynamic newly-industrialized economy, and the EU, the largest economic block have negotiated an FTA. It came in force on July 1, 2011. Before the FTA was formed, the two were important trading partners of each other. Korea has enjoyed a trade surplus in merchandise trade vis-à-vis the EU. An overwhelmingly large proportion of EU-Korea trade is in manufacturing products. The EU took has had a surplus in trade in services vis-à-vis Korea. The FTA protocol has specified lowering of tariffs and NTBs in a phased manner over a transition period. The FTA had sector-focused negations. Technological standards and environmental considerations are a part of the FTA protocol. It has a comprehensive coverage and in trade economics parlance known as a “deep” regional integration arrangement.The impact of the FTA on the two partner economies would be positive but small. The empirical analyses predictably concluded that of the two, the FTA will benefit Korean economy relatively more in terms of welfare gains, while the EU economy will only gain modestly. An important fact that will influence the welfare gains is that the magnitude of the EU trade with Korea; it is only 2 percent to 2.5 percent of total extra-EU trade. Sectoral impact of the FTA will be important for both the EU and Korea and this article elucidates which sectors will benefit more than others. To protect domestic producers and markets from sudden surge in imports, there is a provision of a bilateral safeguard clause in the FTA.

Suggested Citation

  • Das Dilip K., 2012. "The EU-Korea Free Trade Agreement: Making of a "Deep" Free Trade Agreement," Global Economy Journal, De Gruyter, vol. 12(1), pages 1-13, March.
    • Handle: RePEc:bpj:glecon:v:12:y:2012:i:1:n:7
    DOI: 10.1515/1524-5861.1774
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    References listed on IDEAS

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    1. repec:wsr:pbrief:y:2011:i:010 is not listed on IDEAS
    2. World Bank, 2011. "World Development Indicators 2011," World Bank Publications - Books, The World Bank Group, number 2315.
    3. Jim Rollo, 2006. "Global Europe: Old Mercantilist Wine in New Bottles?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 61(04), pages 403-414, December.
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    Cited by:

    1. Kalirajan Kaliappa & Paudel Ramesh, 2015. "India’s Trade Deficit with China: Will Free Trade Agreement (FTA) Work for India?," Global Economy Journal, De Gruyter, vol. 15(4), pages 485-505, December.
    2. Kaliappa Kalirajan, 2022. "Will free trade agreement between India and China reduce India’s trade deficit?," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 194-208, December.

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